Standard Bank Malawi Plc Interim Report Shows 70% Increase in Profit After Tax

Published On: August 18, 2023Company: Standard Bank Malawi Plc (STNBIC.mw)
What dividends were declared in prior year?
A first interim dividend of MK21.31 per ordinary share representing MK5 billion was paid in prior year.

Economic Highlights

  • Foreign exchange demand and supply imbalances have resulted in a cumulative 2.36% depreciation of the Kwacha by the end of June.
  • Cost pressures have caused headline inflation to close the period at 27.3%, up from 23.5% in June 2022.
  • The Policy rate was raised from 18% to 22%, triggering increases in the Reference rate and commercial banks Base lending rates.
  • The liquidity reserve requirement (LRR) for local currency deposits was adjusted upwards from 3.75% to 5.75%.

Performance

  • The Group grew its revenues, managed costs growth below inflationary levels and grew its balance sheet.
  • Profit after tax of MK26.9 billion was 70% above prior year.
  • Total revenue grew by 56% year-on-year driven by growth in both net interest income (71%) and non-interest revenue (38%).
  • Pricing of selected fees and commissions reduced, resulting in a 20% year-on-year increase in net fees and commissions.
  • Trading revenue grew by 51% year-on-year, driven by increased trading volumes.
  • Credit impairments were significantly up due to growth in the performing customer loan book.
  • Operating costs were 15% up on prior year.
  • The cost to income ratio reduced from 50% in prior year to 37% in the current year.
  • Earnings per share for the half year increased from MK67.57 in 2022 to MK115.05 in 2023.

Outlook

  • The operating environment is expected to remain challenging in the second half of the year.
  • An Extended Credit Facility programme with the International Monetary Fund could bring about currency stability.

Dividend

  • The directors resolved not to pay an interim dividend for the half year ended 30 June 2023.
  • The directors will continue to review the prevailing and expected market conditions and declare a dividend once macroeconomic conditions improve.
  • A first interim dividend of MK21.31 per ordinary share representing MK5 billion was paid in prior year.

Takeaway

Standard Bank Malawi Plc demonstrated its resilience as it continued to operate in a challenging environment characterized by foreign currency demand and supply imbalances and inflationary pressures. Despite the underlying challenges, the Group grew its revenues, managed costs growth, grew its balance sheet, experienced higher profitability, and saw an increase in earnings per share. Although the Group did not issue a dividend for the half year because of the difficulties presented by inflationary pressures, they will continue to review the market conditions and declare a dividend once macroeconomic conditions improve.

Useful links

About Standard Bank Malawi Limited (STNBIC.mw)

The Standard Bank of Malawi is a financial services institution in Malawi providing products and services for personal and business banking, corporate and investment banking, and Treasury and Capital Management. The company provides a wide range of products; from transactional accounts, electronic banking and short- and long-term savings accounts to vehicle and equipment finance, bancassurance, structured finance, corporate lending and foreign exchange. The Standard Bank of Malawi also provides financial services to the government of Malawi, parastatals, financial institutions and international counterparts. It is a subsidiary of Standard Group in South Africa. The organisation was previously known as the Commercial Bank of Malawi and opened its first branch in Limbe in the Blantyre District in 1970. Today, the financial institution has a national footprint with 19 branches in the major towns and cities of Malawi. Standard Bank of Malawi is listed on the Malawi Stock Exchange

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